<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
MAY 3, 1998 1-3822
CAMPBELL SOUP COMPANY
NEW JERSEY 21-0419870
STATE OF INCORPORATION I.R.S. EMPLOYER IDENTIFICATION NO.
CAMPBELL PLACE
CAMDEN, NEW JERSEY 08103-1799
PRINCIPAL EXECUTIVE OFFICES
TELEPHONE NUMBER: (609) 342-4800
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO .
----- -----
THERE WERE 449,067,957 SHARES OF CAPITAL STOCK OUTSTANDING
AS OF JUNE 1, 1998.
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS
(unaudited)
(millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- --------------------------
MAY April MAY April
3, 1998 27, 1997 3, 1998 27, 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $1,572 $1,541 $5,397 $5,251
- - ----------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold 775 809 2,623 2,707
Marketing and selling expenses 397 349 1,226 1,102
Administrative expenses 84 70 244 218
Research and development expenses 18 16 52 49
Other expense 20 39 61 102
Restructuring charges 262 - 262 204
- - ----------------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,556 1,283 4,468 4,382
- - ----------------------------------------------------------------------------------------------------------------------
Earnings before interest and taxes 16 258 929 869
Interest, net 45 43 131 116
- - ----------------------------------------------------------------------------------------------------------------------
Earnings (loss) before taxes (29) 215 798 753
Taxes on earnings 7 73 291 274
- - ----------------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations (36) 142 507 479
Earnings (loss) from discontinued operations (54) 15 (18) 42
Cumulative effect of change in accounting principle - - (11) -
- - ----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ (90) $ 157 $ 478 $ 521
======================================================================================================================
Per share - basic
Earnings (loss) from continuing operations $(0.08) $ 0.31 $ 1.11 $ 1.01
Earnings (loss) from discontinued operations (0.12) 0.03 (0.04) 0.08
Cumulative effect of change in accounting principle - - (0.02) -
- - ----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $(0.20) $ 0.34 $ 1.05 $ 1.09
======================================================================================================================
Dividends $0.210 $0.193 $0.613 $0.558
======================================================================================================================
Weighted average shares outstanding - basic 453 464 456 476
======================================================================================================================
Per share - assuming dilution
Earnings (loss) from continuing operations $ (0.08) $ 0.30 $ 1.10 $ 0.99
Earnings (loss) from discontinued operations (0.12) 0.03 (0.04) 0.08
Cumulative effect of change in accounting principle - - (0.02) -
- - ----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ (0.20) $ 0.33 $ 1.04 $ 1.07
======================================================================================================================
Weighted average shares outstanding - assuming dilution 453 470 462 482
======================================================================================================================
See Notes to Financial Statements
</TABLE>
<PAGE> 3
CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS
(unaudited)
(millions)
<TABLE>
<CAPTION>
MAY August
3, 1998 3, 1997
------- -------
<S> <C> <C>
Current assets
Cash and cash equivalents
Accounts receivable $ 46 $ 17
Inventories 759 523
Other current assets 542 598
234 150
- - ----------------------------------------------------------------------------------------------------------------
Total current assets 1,581 1,288
- - ----------------------------------------------------------------------------------------------------------------
Plant assets, net of depreciation 1,944 2,044
Intangible assets, net of amortization 1,985 1,710
Net assets of discontinued operations - 632
Other assets 541 522
- - ----------------------------------------------------------------------------------------------------------------
Total assets $ 6,051 $6,196
================================================================================================================
Current liabilities
Notes payable $ 1,635 $1,506
Payable to suppliers and others 388 485
Accrued liabilities 785 553
Dividend payable 95 88
Accrued income taxes 224 137
- - ----------------------------------------------------------------------------------------------------------------
Total current liabilities 3,127 2,769
- - ----------------------------------------------------------------------------------------------------------------
Long-term debt 1,191 1,151
Nonpension postretirement benefits 408 442
Other liabilities, including deferred
income taxes of $242 and $214 389 414
- - ----------------------------------------------------------------------------------------------------------------
Total liabilities 5,115 4,776
- - ----------------------------------------------------------------------------------------------------------------
Shareowners' equity
Preferred stock; authorized 40 shares;
None issued - -
Capital stock, $.0375 par value; authorized
560 shares; issued 542 shares 20 20
Capital surplus 383 338
Earnings retained in the business 3,618 3,571
Capital stock in treasury, at cost (2,971) (2,459)
Cumulative translation adjustments (114) (50)
- - ----------------------------------------------------------------------------------------------------------------
Total shareowners' equity 936 1,420
- - ----------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' equity $ 6,051 $ 6,196
================================================================================================================
See Notes to Financial Statements
</TABLE>
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<PAGE> 4
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(millions)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------
MAY April
3, 1998 27, 1997
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings, excluding discontinued operations $ 496 $ 479
Non-cash charges to net earnings
Cumulative effect of accounting change 11 -
Restructuring charge 262 204
Depreciation and amortization 201 219
Deferred taxes (61) (50)
Other, net 60 43
Changes in working capital
Accounts receivable (145) (90)
Inventories 40 107
Other current assets and liabilities (107) (32)
- - -------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 757 880
- - -------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of plant assets (151) (149)
Sales of plant assets 20 28
Businesses acquired (472) (227)
Sales of businesses 21 73
Other, net (1) (25)
- - -------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (583) (300)
- - -------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term borrowings 300 300
Repayments of long-term borrowings (20) (6)
Short-term borrowings 1,179 1,095
Repayments of short-term borrowings (1,283) (309)
Dividends paid (272) (260)
Treasury stock purchased (545) (1,451)
Treasury stock issued 76 60
- - -------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (565) (571)
- - -------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) discontinued operations 436 (23)
- - -------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (16) (14)
- - -------------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 29 (28)
Cash and cash equivalents - beginning of period 17 28
- - -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents - end of period $ 46 $ -
- - -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
-4-
<PAGE> 5
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF SHAREOWNERS' EQUITY
(unaudited)
(millions, except per share amounts)
<TABLE>
<CAPTION>
Capital Stock
----------------------------------- Earnings
Issued In Treasury Retained Cumulative Total
---------------- ----------------- Capital in the translation shareowners'
Shares Amount Shares Amount surplus Business adjustments equity
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 28, 1996 542 $20 (48) ($779) $228 $3,211 $ 62 $ 2,742
Net earnings 521 521
Dividends ($.558 per share) (264) (264)
Treasury stock purchased (36) (1,451) (1,451)
Treasury stock issued under
Management incentive and
Stock option plans 3 (5) 77 72
Translation adjustments (68) (68)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance at April 27, 1997 542 $20 (81) ($2,235) $305 $3,468 $ (6) $ 1,552
===================================================================================================================================
BALANCE AT AUGUST 3, 1997 542 $20 (84) ($2,459) $338 $3,571 $ (50) $ 1,420
NET EARNINGS 478 478
DIVIDENDS ($.613 PER SHARE) (281) (281)
TREASURY STOCK PURCHASED (10) (545) (545)
TREASURY STOCK ISSUED UNDER
MANAGEMENT INCENTIVE AND
STOCK OPTION PLANS 2 33 45 78
TRANSLATION ADJUSTMENTS (64) (64)
SPIN-OFF OF SPECIALTY FOODS SEGMENT (150) (150)
- - -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 3, 1998 542 $20 (92) ($2,971) $383 $3,618 $(114) $ 936
===================================================================================================================================
See Notes to Financial Statements
</TABLE>
-5-
<PAGE> 6
CAMPBELL SOUP COMPANY CONSOLIDATED
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(millions)
(a) The financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of the
results for the indicated periods. All such adjustments are of a
normal recurring nature. Certain reclassifications were made to the
prior year amounts to conform with current presentation, including
classifying the Specialty Foods segment as a discontinued operation.
(b) Discontinued Operations
-----------------------
The Specialty Foods segment was comprised of Vlasic pickles, Swanson
frozen foods, and certain European, Argentine and U.S. businesses. On
September 9, 1997, the company announced its intention to spinoff the
Specialty Foods segment to its shareowners as an independent
publicly-traded company. The spin-off, which qualified as a tax-free
distribution to U.S. shareholders, was effective March 30, 1998. On
this date, shareowners of record as of March 9, 1998 received one
share of the common stock of the new company, Vlasic Foods
International Inc. (Vlasic), for every ten shares of Campbell Soup
Company capital stock.
In March 1998, the company entered into a revolving credit facility
and borrowed $500 million. In connection with the spin-off, the
revolving credit facility and outstanding obligation of $500 million
were assumed by Vlasic. In addition, the company received
approximately $75 million subsequent to May 3, 1998 from subsidiaries
of Vlasic for repayment of certain advances.
Results of discontinued operations were as follows:
<TABLE>
<CAPTION>
QUARTER ENDED YEAR-TO-DATE
MAY 3, 1998(1) APRIL 27, 1997 MAY 3, 1998(1) APRIL 27, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $169 $329 $809 $989
==== ==== ==== ====
Earnings (loss) before taxes $(17) $ 23 $ 41 $ 63
Taxes on earnings (1) 8 21 21
---- ---- ---- ----
Earnings (loss) from (16) 15 20 42
operations
Spin-off costs 38 - 38 -
---- ---- ---- ----
Earnings (loss) from
discontinued operations, net $(54) $ 15 $(18) $ 42
==== ==== ==== ====
</TABLE>
(1) Results of Vlasic are included through March 29, 1998.
-6-
<PAGE> 7
Earnings from discontinued operations do not include an allocation of
interest expense. Spin-off costs primarily consist of taxes and legal
and advisory services incurred in connection with the transaction.
The earnings (loss) from discontinued operations includes the
after-tax effect of a third quarter fiscal 1998 restructuring charge
of $22 million and first quarter fiscal 1997 after-tax restructuring
charge of $8 million. The 1998 restructuring program was designed to
improve operational efficiency by closing certain U.S. and European
administrative offices and production facilities. The 1997 program
was designed to improve operational efficiency by closing various
pickle facilities and reducing operational positions from the
worldwide workforce. The restructuring charges included cash charges
primarily related to severance and employee benefit costs and
non-cash charges for losses on the disposition of plant assets.
The net assets of the Specialty Foods segment are reflected as "Net
assets of discontinued operations" in the consolidated balance sheet
as of August 3, 1997, and are comprised of the following:
August 3, 1997
--------------
Current assets $295
Plant assets, net 516
Other non-current assets 84
Current liabilities (212)
Non-current liabilities (51)
-----------------------------------------------------------
Net assets of discontinued operations $632
===========================================================
(c) Restructuring Charge
--------------------
A special charge included in earnings from continuing operations of
$262 million ($193 million after-tax or $.42 per share), was recorded
in the third quarter fiscal 1998 to cover the costs of a
restructuring and divestiture program approved in March 1998 by the
company's Board of Directors. This one-time charge relates to the
rationalization of certain U.S., European and Australian production
and administrative facilities and anticipated losses on the
divestitures of non-strategic businesses with annual sales of
approximately $170 million, including Fresh Start Bakeries and
Melbourne Mushrooms. The restructuring program includes the
elimination of approximately 750 employee positions.
The restructuring charge includes approximately $78 million in cash
charges primarily related to severance, employee benefits costs and
lease termination fees. The balance of the restructuring charge
relates to non-cash charges for estimated losses on the disposition
of plant assets and divestitures of businesses. The company expects
to complete the restructuring and divestiture program by the fourth
quarter fiscal 1999.
See also note (b) for the restructuring charge recorded by the
Specialty Foods segment during the third quarter fiscal 1998, which
is included in earnings from
-7-
<PAGE> 8
discontinued operations.
(d) Cumulative Effect of Change In Accounting Principle
---------------------------------------------------
In the second quarter of fiscal 1998, the company adopted the
provisions of the Emerging Issues Task Force (EITF) consensus ruling
on Issue 97-13, "Accounting for Costs Incurred in Connection with a
Consulting Contract that Combines Business Process Reengineering and
Information Technology Transformation." The unamortized balance of
previously capitalized business process reengineering costs was
written off as a cumulative effect of change in accounting principle
of $11 million or $.02 per share, net of an income tax benefit of
approximately $7 million.
(e) Earnings Per Share
------------------
The company adopted the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("FAS 128") as of
the second quarter fiscal 1998. FAS 128 revised the standards for
computation and presentation of earnings per share ("EPS"), requiring
the presentation of both basic EPS and EPS assuming dilution. Basic
EPS is based on the weighted average shares outstanding during the
applicable period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Prior periods have
been restated to conform with the provisions of FAS 128. For the
periods presented in the Statements of Earnings, the calculations of
basic EPS and EPS assuming dilution vary in that the weighted average
shares outstanding assuming dilution includes the incremental effect
of stock options, except when such effect would be antidilutive.
(f) Acquisitions
------------
In December 1997, the company acquired the Liebig soup business in
France for approximately $180 million. Aggregate annual sales are
approximately $75 million. Also in December 1997, Arnotts Limited
purchased the remaining outstanding ordinary shares held by its
minority shareholders for an aggregate purchase price of
approximately $290 million. Prior to the transaction, the company
owned approximately 70% of Arnotts Limited. The acquisitions have
been recorded using the purchase method of accounting, and
accordingly, results of their operations have been included in the
company's consolidated financial statements since the effective dates
of the respective acquisitions. The aggregate excess of the purchase
price over the fair value of the net identifiable assets of $360
million has been recorded as goodwill and will be amortized over 40
years. The allocation of the purchase price of the acquisitions is
preliminary and may be modified as additional financial information
is available.
(g) Segment Information
-------------------
The company operates in three business segments: Soup and Sauces,
Biscuits and Confectionery, and Foodservice. The segments are managed
as strategic units due to their distinct manufacturing processes,
marketing strategies and distribution channels. The Soup and Sauces
segment includes the worldwide soup businesses, Prego spaghetti
sauces, Pace Mexican sauces, Franco-American pasta, Swanson
-8-
<PAGE> 9
broths, and V8 beverages. The Biscuits and Confectionery segment
includes the Godiva Chocolatier, Pepperidge Farm, Arnotts Limited and
Delacre businesses. Foodservice represents the distribution of
products, including Campbell's Soups and Campbell's Specialty Kitchen
entrees, to the food service and home meal replacement markets. See
note (b) regarding the Specialty Foods segment, which has been
reclassified as a discontinued operation.
Accounting policies for measuring segment assets and earnings before
interest and taxes are substantially consistent with those described
in the summary of significant accounting policies included in the
fiscal 1997 Annual Report. The company evaluates segment performance
based on earnings before interest and taxes, excluding certain
non-recurring charges. Foodservice products are principally produced
by the tangible assets of the company's other segments. Accordingly,
tangible assets have not been allocated to the Foodservice segment.
Depreciation and amortization is allocated to Foodservice based on
budgeted production hours. Transfers between segments are recorded at
cost plus mark-up or at market.
-9-
<PAGE> 10
MAY 3, 1998
- - -----------
<TABLE>
<CAPTION>
Corporate
Soup and Biscuits and Food- and
Sauces Confectionery Service Other(1) Eliminations(2) Total
------ ------------- ------- -------- --------------- -----
THREE MONTHS ENDED
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,009 361 116 93 (7) $1,572
Earnings before
Interest and Taxes(3) $ 109 15 9 (95) (22) $ 16
Depreciation and
Amortization $ 34 23 2 5 4 $ 68
Capital Expenditures $ 32 23 - 2 4 $ 61
NINE MONTHS ENDED
Net sales $3,613 1,197 341 294 (48) $5,397
Earnings before
Interest and Taxes(3) $ 875 150 40 (90) (46) $ 929
Depreciation and $ 100 67 6 14 14 $ 201
Amortization
Capital Expenditures $ 77 53 - 10 11 $ 151
Segment Assets $3,402 1,625 90 351 583 $6,051
</TABLE>
- - -----------------------------
(1) Represents financial information of certain prepared convenience
food businesses not categorized as reportable segments.
(2) Represents elimination of intersegment sales, unallocated
corporate expenses and unallocated assets, including corporate
offices, deferred taxes and pension accounts.
(3) Contributions to earnings before interest and taxes by segment
include the effects of a third quarter restructuring charge of
$262 as follows: Soup and Sauces $135, Biscuits and Confectionery
$25, Foodservice $4, and Other $98.
-10-
<PAGE> 11
<TABLE>
<CAPTION>
APRIL 27, 1997
- - --------------
Corporate
Soup and Biscuits and Food- and
Sauces Confectionery Service Other(1) Eliminations(2) Total
------ ------------- ------- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
Net sales $ 974 353 103 127 (16) $1,541
Earnings before
Interest and Taxes $ 225 38 12 (1) (16) $ 258
Depreciation and
Amortization $ 32 31 3 9 4 $ 79
Capital Expenditures $ 22 19 - 4 6 $ 51
NINE MONTHS ENDED
Net sales $3,384 1,180 325 407 (45) $5,251
Earnings before
Interest and Taxes(3) $ 782 106 45 (13) (51) $ 869
Depreciation and $ 97 76 7 25 14 $ 219
Amortization
Capital Expenditures $ 55 64 - 11 19 $ 149
Segment Assets(4) $2,966 1,523 78 439 558 $5,564
</TABLE>
- - -----------------------------
(1) Represents financial information of certain prepared convenience
food businesses not categorized as reportable segments.
(2) Represents elimination of intersegment sales, unallocated
corporate expenses and unallocated assets, including corporate
offices, deferred taxes and pension accounts.
(3) Contributions to earnings before interest and taxes by segment
include the effects of a first quarter restructuring charge of
$204 as follows: Soup and Sauces - $134, Biscuits and
Confectionery - $53, and Other - $17.
(4) Segment assets reported as of the fiscal year ended August 3, 1997
exclude net assets of discontinued operations of $632.
-11-
<PAGE> 12
(h) Inventories May August
----------- 3, 1998 27, 1997
------- --------
Raw materials, containers and supplies $197 $258
Finished products 345 340
--------------------------------------------------------------
$542 $598
==============================================================
Approximately 62% of inventory is accounted for on the last in, first
out (LIFO) method of determining cost. If the first in, first out
inventory valuation method had been used exclusively, inventories
would not differ materially from the amounts reported at May 3, 1998
and August 3, 1997.
(i) Notes Payable and Long-Term Debt
--------------------------------
In December 1997, the company partially financed the purchase of the
remaining outstanding minority shares in Arnotts Limited with a
one-year $260 million bank borrowing bearing interest at 5.1%.
In December 1997, the company issued $300 million of notes due
December 1, 2002 bearing interest at 6.15%. The issuance was the
second draw down on the company's $1 billion shelf registration filed
with the Securities and Exchange Commission in fiscal 1997. As of May
3, 1998, $400 million remains available for issuance under the shelf
registration.
Also in December 1997, a wholly owned subsidiary of the company
entered into a one-year borrowing arrangement with an investor group
for approximately $100 million. Principal and interest payments are
made monthly under the terms of the arrangement.
(j) Subsequent Events
-----------------
On May 4, 1998 the company finalized the sale of its European candy
operation, Continental Sweets Europe.
On May 26, 1998 the company announced it has reached an agreement to
sell its European-based biscuit business, Delacre, for approximately
$125 million. The agreement is subject to various regulatory
approvals and the conclusion of consultation with employees and trade
unions.
In June 1998, the company finalized the sale of the assets of its
can-making operations at four of its North American thermal
manufacturing plants for approximately $123 million. In conjunction
with the transaction, the company entered into a long-term supply
agreement with the buyer.
On June 2, 1998 the company announced that the Board of Directors
approved a new program to repurchase up to $2 billion of the
company's shares over the next three years. The authorization
includes a continuation of the company's strategy of repurchasing
approximately two percent of its outstanding shares annually.
-12-
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CAMPBELL SOUP COMPANY
OVERVIEW
- - --------
On September 9, 1997, the company announced its intention to spin off the
Specialty Foods segment to its shareowners as an independent publicly-traded
company. The spin-off, which qualified as a tax-free distribution to U.S.
shareowners, was effective March 30, 1998. On this date, shareowners of record
as of March 9, 1998 received one share of the common stock of the new company,
Vlasic Foods International Inc. (Vlasic), for every ten shares of Campbell Soup
Company capital stock. In March 1998, the company entered into a revolving
credit facility and borrowed $500 million. In connection with the spin-off, the
revolving credit facility and outstanding obligation of $500 million were
assumed by Vlasic. In addition, the company received approximately $75 million
subsequent to May 3, 1998 from subsidiaries of Vlasic for repayment of certain
advances.
Effective with the period ended May 3, 1998, Vlasic was reported as a
discontinued operation in accordance with Accounting Principles Board Opinion
No. 30 "Reporting the Results of Operations - Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions" ("APB 30"). The net operating results of
Vlasic were reported as "Earnings (loss) from discontinued operations" and the
net assets as of August 3, 1997 were reported as "Net assets of discontinued
operations".
RESULTS OF CONTINUING OPERATIONS
- - --------------------------------
Comparability in net earnings and earnings per share with the third quarter last
year was impacted by a restructuring charge of $262 million ($193 million
after-tax or $.42 per share) recorded in the quarter ended May 3, 1998.
For the quarter ended May 3, 1998, the company reported a loss from continuing
operations of $36 million or $.08 per share. Excluding the restructuring charge,
earnings from continuing operations increased 11% to $157 million and basic and
diluted earnings per share increased 13%.
Comparability of net earnings and earnings per share for the nine months ended
May 3, 1998 was impacted by the third quarter fiscal 1998 restructuring charge,
the cumulative effect of adopting EITF 97-13, "Accounting for Costs Incurred in
Connection with a Consulting Contract that Combines Business Process
Reengineering and Information Technology Transformation" in the second quarter
of fiscal 1998 ($11 million after-tax or $.02 per share) and the first quarter
fiscal 1997 restructuring charge of $204 million ($152 million after-tax or $.31
per share). Excluding these charges, the company's net earnings increased 9% and
basic and diluted earnings per share increased 14%. Earnings from continuing
operations, before these charges, increased 11% and
-13-
<PAGE> 14
basic and diluted earnings per share increased 16%.
THIRD QUARTER
- - -------------
SALES
- - -----
Sales in the quarter increased 2% to $1.57 billion from $1.54 billion last year.
The growth was due to a 4% increase from volume and product mix, 2% from higher
selling prices, 1% from acquisitions, offset by a 5% decline due to currency and
divestitures.
An analysis of net sales by segment follows:
(millions) 1998 1997 % CHANGE
- - ---------- ---- ---- --------
Soup and Sauces $1,009 $974 4%
Biscuits and Confectionery 361 353 2
Foodservice 116 103 13
- - --------------------------------------------------------------------------------
Subtotal 1,486 1,430 4
Other 93 127 (27)
Interdivision (7) (16) -
- - --------------------------------------------------------------------------------
$1,572 $1,541 2%
================================================================================
Soup and Sauces reported a moderate sales increase despite a worldwide wet soup
volume decline of 3%. U.S. wet soup volume declined 8%, in line with
expectations, reflecting the impact of last year's third quarter buy-in prior to
an announced price increase. Swanson broth, Erasco in Germany and Campbell's in
Australia reported double-digit sales gains. In addition, Liebig in France,
acquired in December 1997, V8 Splash and Franco-American pasta contributed to
the sales growth.
Biscuits and Confectionery posted a moderate sales increase compared to the
prior year. The sales performance was adversely impacted by currency movement,
particularly the weakness of the Australian dollar. Excluding the impact of
currency, sales increased 9%. Pepperidge Farm Goldfish crackers, Chocolate Chunk
cookies and fresh breads reported robust volume growth. In addition, Godiva
reported double-digit growth in all channels of distribution in North America,
with positive trends continuing in Europe and Asia. Arnotts Limited in Australia
also reported strong sales gains, excluding the impact of currency.
Foodservice reported strong sales gains led by Pace products and the
introduction of Prego entrees and V8 Splash into traditional food service
channels during the quarter.
-14-
<PAGE> 15
GROSS MARGIN
- - ------------
Gross margin, defined as net sales less cost of products sold, increased $65
million in the quarter. As a percent of sales, gross margin was 50.7% compared
to 47.5% last year. The improvement was primarily due to cost savings generated
from global procurement initiatives and continued productivity gains in
manufacturing facilities.
MARKETING AND SELLING EXPENSES
- - ------------------------------
Marketing and selling expenses as a percent of sales increased to 25% from 23%
last year. The increase is attributable to a 10% increase in worldwide
advertising spending in the promotion of Prego pasta sauces, V8 beverages,
Pepperidge Farm Goldfish and Erasco products.
ADMINISTRATIVE EXPENSES
- - -----------------------
Administrative expenses as a percent of sales increased .8 percentage points to
5.3%. The increase was due principally to consulting services incurred in
connection with developing the New Campbell Soup Company strategic growth plan.
Research and development expenses as a percent of sales were consistent with
last year at 1%.
Other expenses declined as compared to last year due primarily to lower expenses
associated with the company's long-term incentive plan obligations.
OPERATING EARNINGS
- - ------------------
Segment operating earnings decreased 86% versus the prior year due to the
restructuring charge recorded in the third quarter of fiscal 1998. Excluding the
restructuring charge, operating earnings increased 9% compared to last year.
-15-
<PAGE> 16
An analysis of operating earnings by segment follows:
(millions) 1998 1997
---------- ---- ----
Soup and Sauces $109 $225
Biscuits and Confectionery 15 38
Foodservice 9 12
----------------------------------------------------------
Subtotal 133 275
Other (95) (1)
----------------------------------------------------------
38 274
Corporate (22) (16)
----------------------------------------------------------
$16 $258
==========================================================
Contributions to earnings by segment include the effect of a third
quarter fiscal 1998 restructuring charge of $262 million as follows:
Soup and Sauces $135 million, Biscuits and Confectionery $25
million, Foodservice $4 million and Other $98 million.
Soup and Sauces earnings, before the restructuring charge, increased 8% to $244
million. Prego pasta sauces, V8 beverages, including V8 Splash, and Campbell's
in Australia led the earnings increase.
Biscuits and Confectionery earnings, before the restructuring charge, increased
3% to $40 million. Excluding the impact of currency, earnings increased 8%.
Pepperidge Farm Goldfish and Godiva posted double-digit earnings growth in the
quarter.
Foodservice earnings, before the restructuring charge, increased 7% to $13
million. The increase was due primarily to Pace products and cost reductions in
manufacturing Pepperidge Farm products.
NON-OPERATING ITEMS
- - -------------------
Interest expense was up slightly versus prior year due to increased debt levels.
Before the restructuring charge, the company's effective tax rate for the
quarter was 32.7% compared to 34.0% in fiscal 1997.
DISCONTINUED OPERATIONS
- - -----------------------
On March 30, 1998, the company completed the spin-off of Vlasic and reported the
net operating results and net assets as a discontinued operation. For the
quarter ended May 3,
-16-
<PAGE> 17
1998, the statements of earnings included two months of Vlasic operations. In
addition, the earnings (loss) from discontinued operations include a third
quarter fiscal 1998 restructuring charge of $22 million ($.05 per share) and
spin-off costs of $38 million ($.08 per share). The restructuring program was
designed to improve operational efficiency by closing certain U.S. and European
administrative offices and production facilities. The spin-off costs primarily
consist of taxes and legal and advisory services incurred in connection with the
transaction. Earnings from discontinued operations, before special charges, were
approximately $6 million.
Earnings in fiscal 1998 were adversely impacted by cattle supply issues in
Argentina and competitive difficulties in the German specialty foods business.
NINE MONTHS
- - -----------
SALES
- - -----
Sales for the nine months increased 3% to $5.40 billion from $5.25 billion last
year. The growth was due to a 4% increase in volume and product mix, 3% from
higher selling prices, 1% from acquisitions offset by a 5% decline due to
currency and divestitures.
An analysis of net sales by segment follows:
(millions) 1998 1997 % CHANGE
- - ---------- ---- ---- --------
Soup and Sauces $3,613 $3,384 7%
Biscuits and Confectionery 1,197 1,180 1
Foodservice 341 325 5
- - ---------------------------------------------------------------------------
Subtotal 5,151 4,889 5
Other 294 407 (28)
Interdivision (48) (45) -
- - ---------------------------------------------------------------------------
$5,397 $5,251 3%
===========================================================================
Soup and Sauces sales were led by worldwide wet soup volume growth of 3% despite
the third quarter U.S. wet soup volume decline. U.S. wet soup volume was flat
versus prior year. International wet soup continued to post volume gains in
Canada, Germany, Mexico, Japan and Asia. In addition, Liebig in France, acquired
in December 1997, contributed to the wet soup sales and volume growth. Swanson
broth, V8 Splash and Franco-American pasta continued their positive momentum.
Biscuits and Confectionery reported a moderate sales increase compared to the
prior year. The performance was adversely impacted by currency movement,
particularly the weakness of
-17-
<PAGE> 18
the Australian dollar. Excluding the impact of currency, sales increased 8%
year-to-date. The increase was driven by Pepperidge Farm Goldfish crackers,
Milano cookies and Swirl breads. In addition, Godiva reported double-digit
growth due to their excellent holiday season, Valentine's Day and Easter sales.
Foodservice sales increase was led by Pace products, Prego entrees and V8
Splash.
GROSS MARGIN
- - ------------
Gross margin increased $230 million year-to-date. As a percent of sales, gross
margin was 51.4% compared to 48.4% last year. The improvement was primarily due
to cost savings generated from global procurement initiatives and continued
productivity gains in manufacturing facilities.
MARKETING AND SELLING EXPENSES
- - ------------------------------
Marketing and selling expenses as a percent of sales increased to 23% from 21%
last year. The increase is attributable to a 13% increase in worldwide
advertising spending primarily in U.S. wet soup, Prego pasta sauces, V8
beverages, Pepperidge Farm Goldfish crackers and Milano cookies and Erasco
products.
ADMINISTRATIVE EXPENSES
- - -----------------------
Administrative expenses as a percent of sales increased .3 percentage points to
4.5%. The increase was primarily due to consulting services and favorable
employee benefits experience recorded in fiscal 1997.
Research and development expenses as a percent of sales were consistent with the
prior year at 1%.
Other expenses declined compared to last year primarily due to reduced minority
interest expense, reflecting the buy-out of Arnotts Limited, and lower
expenses associated with the company's long-term incentive plans.
OPERATING EARNINGS
- - ------------------
Segment operating earnings increased 6% compared to last year. Excluding the
fiscal 1998 and 1997 restructuring charges, operating earnings increased 10%
versus the prior year.
-18-
<PAGE> 19
An analysis of operating earnings by segment follows:
(millions) 1998 1997
---------- ---- ----
Soup and Sauces $875 $782
Biscuits and Confectionery 150 106
Foodservice 40 45
-----------------------------------------------------------
Subtotal 1,065 933
Other (90) (13)
-----------------------------------------------------------
975 920
Corporate (46) (51)
-----------------------------------------------------------
$929 $869
===========================================================
Contributions to earnings by segment included the effect of a third
quarter fiscal 1998 restructuring charge of $262 million as follows:
Soup and Sauces $135 million, Biscuits and Confectionery $25
million, Foodservice $4 million and Other $98 million.
Contributions to earnings by segment included the effect of a first
quarter fiscal 1997 restructuring charge of $204 million as follows:
Soup and Sauces $134 million, Biscuits and Confectionery $53 million
and Other $17 million.
Soup and Sauces earnings, excluding the restructuring charges, were up 10% due
to sales growth in Campbell's ready-to-serve soups including Joseph A. Campbell
and Chunky soups. In addition, Swanson broths and our core businesses in the
United Kingdom, Germany and Mexico reported strong earnings. Liebig,
Franco-American pastas and gravies and V8 Splash also contributed to the
earnings growth.
Biscuits and Confectionery earnings, excluding the restructuring charges,
increased 10% led by excellent earnings growth at Pepperidge Farm and Godiva.
Pepperidge Farm's Swirl and frozen breads delivered strong earnings performance
and Godiva posted record earnings as a result of outstanding holiday season,
Valentine's Day and Easter sales volume growth.
Foodservice earnings, excluding the restructuring charges, were down 1% due to
lower sales of non-soup products.
-19-
<PAGE> 20
NON-OPERATING ITEMS
- - -------------------
Comparability in interest expense is primarily impacted by the financing costs
associated with the company's $2.5 billion share repurchase program that
commenced in October 1996 with the "Dutch Auction" tender offer.
The effective tax rate was 36.5% compared to 36.4% last year. Excluding the
restructuring charges, the year-to-date effective tax rate was 34% for fiscal
1998 and 1997.
DISCONTINUED OPERATIONS
- - -----------------------
The earnings (loss) from discontinued operations for the period ended May 3,
1998 include eight months of Vlasic operations and the restructuring charge and
spin-off costs discussed above. In addition, fiscal 1997 earnings from
discontinued operations include a first quarter restructuring charge of $8
million ($.01 per share). Earnings from discontinued operations, before special
charges, were $42 million compared to $50 million in fiscal 1997.
Earnings in fiscal 1998 continued to be adversely impacted by cattle supply
issues in Argentina and competitive difficulties in the German specialty foods
business.
RESTRUCTURING CHARGE
- - --------------------
During the third quarter fiscal 1998, the company recorded a charge included in
earnings from continuing operations of $262 million ($193 million after-tax or
$.42 per share) related to plant and administrative rationalization and
portfolio reconfiguration in the U.S., Europe and Australia. As a result,
approximately 750 employee positions will be eliminated, primarily due to
closure of plant locations and consolidation of administrative functions.
This one-time charge includes the realignment of soup, sauces and juice
production, the rationalization of administrative offices in the U.S., Europe
and Australia, the closure of several production facilities and the divestiture
of certain non-strategic businesses with annual sales of approximately $170
million, including Fresh Start Bakeries Inc. and Melbourne Mushrooms. The
decision to discontinue production at certain facilities was precipitated by
analyses of production capacity and the search for cost savings to fund
investments for brand growth. The restructuring program is expected to be
completed in fiscal 1999.
The restructuring program is expected to require pre-tax cash outflows of
approximately $78 million, excluding proceeds from divestitures. Cash charges,
the majority of which will be paid in fiscal 1999, relate primarily to
severance, employee benefit costs and lease termination fees. Proceeds from the
divestiture program, net of tax outflows and other cash transaction costs, are
expected to result in increases in cash flow in fiscal 1999. Cash outflows are
not expected to have a material adverse effect on the company's liquidity. The
balance of the charge relates to non-cash charges for the expected loss on the
disposition of plant assets and divestitures of businesses.
-20-
<PAGE> 21
From this program, the company expects to realize approximately $74 million of
ongoing annual pre-tax savings, of which approximately 70% is expected to be
achieved in fiscal 1999. Expected annual savings are not necessarily indicative
of future incremental earnings due to management's commitment to fund
investments to grow brands and drive volume growth.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
The company generated cash from operations of $757 million compared to $880
million last year. This decrease is principally due to changes in working
capital, including spending on the restructuring program and a reduction in
accounts payable due to timing of vendor payments.
Capital expenditures were $151 million versus $149 million last year. The
company continues to aggressively manage its capital outlays and expects total
expenditures to approximate $305 million in fiscal 1998.
During the year, the company acquired the Liebig soup business in France for
approximately $180 million and the outstanding ordinary shares held by Arnotts
Limited's minority shareholders for approximately $290 million.
In the first nine months, the company repurchased approximately 10.2 million
shares versus 35.6 million shares last year. By repurchasing shares, the company
expects to utilize existing cash and debt capacity to lower its cost of capital
and increase returns to shareowners. The company's long-term strategy is to
repurchase approximately two percent of its outstanding shares annually.
In December 1997, the company issued $300 million 6.15% notes due December 1,
2002. This issuance was the second draw down on the company's $1 billion shelf
registration. Four hundred million dollars remain available under the shelf
registration. In addition, the company entered into a one-year borrowing
arrangement for approximately $100 million. Principal and interest payments are
remitted monthly in accordance with the terms of the arrangement.
In February 1998, the company entered into a revolving credit facility which
provides for aggregate funding of $750 million. In March 1998, the company
borrowed $500 million under the facility and in connection with the spin-off of
Vlasic, assigned the revolving credit facility and the outstanding debt
obligation to Vlasic. The company used the net proceeds of $500 million to repay
short-term debt.
OTHER MATTERS
- - -------------
Historically, certain computer programs were written using two digits rather
than four to define the applicable year. Accordingly, the company's software may
recognize a date using "00" as 1900 rather than the year 2000, which could
result in major systems failures or
-21-
<PAGE> 22
miscalculations, commonly referred to as the Year 2000 issue.
The company has performed an assessment of major information technology systems
and expects that all necessary modifications and/or replacements will be
completed in a timely manner to ensure that systems are Year 2000 compliant.
Based on current estimates, the costs of addressing this issue are not expected
to have a material adverse effect on the company's financial position, results
of operations or cash flows. The potential impact of the Year 2000 issue on
significant customers, vendors and suppliers cannot be reasonably estimated at
this time.
RECENT DEVELOPMENTS
- - -------------------
On May 4, 1998, the company finalized the sale of its European candy operation,
Continental Sweets Europe.
On May 26, 1998 the company announced it has reached an agreement to sell its
European-based biscuit business, Delacre, for approximately $125 million. The
agreement is subject to various regulatory approvals and the conclusion of
consultation with employees and trade unions.
In June 1998, the company finalized the sale of the assets of its can-making
operations at four of its North American thermal manufacturing plants for
approximately $123 million. In conjunction with the transaction, the company
entered into a long-term supply agreement with the buyer.
On June 2, 1998 the company announced that the Board of Directors approved a new
program to repurchase up to $2 billion of the company's shares over the next
three years. The authorization includes a continuation of the company's strategy
of repurchasing approximately two percent of its outstanding shares annually.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income." This statement establishes standards for
the reporting and display of comprehensive income. The provisions of the
statement are effective for fiscal years beginning after December 15, 1997.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position number 98-1 (SOP 98-1), "Accounting for the Costs of
Software Developed or Obtained for Internal Use". SOP 98-1, which is effective
for fiscal years beginning after December 15, 1998, is not expected to have a
material impact on the company's consolidated financial position, results of
operation or cash flow.
FORWARD LOOKING INFORMATION
- - ---------------------------
From time to time, in written reports, including the fiscal 1997 Annual Report,
and oral statements, we discuss our expectations regarding future performance of
the company. These "forward-looking statements" are based on currently available
competitive, financial and economic data and our operating plans. They are
inherently uncertain, and investors must
-22-
<PAGE> 23
recognize that actual results could differ materially from those expressed or
implied in the forward-looking statements. In addition, as discussed in the
Management's Discussion and Analysis:
o The completion of the company's divestiture program depends on our ability
to find buyers to purchase these businesses at prices we consider
appropriate.
o The forecasted savings related to the company's restructuring program
assumes that plant closings are completed and administrative functions are
consolidated within the time frames used to develop the estimates.
o Utilization of the company's existing cash and debt capacity to repurchase
its shares is contingent upon market conditions and potential alternative
uses that may arise such as acquisition opportunities.
-23-
<PAGE> 24
PART II
ITEM 1. LEGAL PROCEEDINGS
In management's opinion, there are no pending claims or litigation, the
outcome of which would have a material effect on the consolidated
results of operations, financial position, or cash flows of the company.
As previously reported, in October 1995, at the request of the
Environmental Protection Agency (EPA), the United States of America
(USA) instituted an action in the United States District Court for the
Eastern District of California, alleging, inter alia, that the company
violated the Clean Air Act by operating certain can manufacturing
equipment at its Sacramento, California facility without a valid permit
and by failing to apply control technology to reduce air emissions. In
August 1997, at the request of the EPA, the USA filed a second complaint
alleging that the company violated the Clean Air Act by modifying
certain can manufacturing equipment at the same facility without a
permit, and without installing control technology. The second complaint
also alleged that the company exceeded certain daily and quarterly
emission limits. The company is disputing all of these alleged
violations. The USA asserts in its complaints that it is seeking the
imposition of civil penalties, calculated on a per diem/per violation
basis, for each of the alleged violations. As noted above, the company
is disputing liability for any and all of the violations alleged. In
addition, the company is disputing the application of the maximum
statutory penalty to any of the alleged violations and the USA's method
of calculating applicable penalties, if any.
Also, the Sacramento Metropolitan Air Quality Management District
(District) issued Notices of Violations, between June 1996 and March
1997, alleging violations of the District rules relating to air
emissions from the can manufacturing facility at the Sacramento plant.
In October 1997, the company settled this matter without admitting
liability.
In December 1996, the EPA alleged that the company violated the Clean
Water Act categorical pretreatment standards related to the level of the
monitored surrogate parameter oil and grease at the can manufacturing
operations of the Sacramento, California facility. After the company
demonstrated continued compliance with the regulations, the EPA agreed
to enter into a consent decree under which the company modified its
waste water self-monitoring program for the total toxic organic
parameter and will pay an administrative penalty of $10,445. The company
expects to finalize the consent decree with the EPA in the fourth
quarter of fiscal 1998. The additional cost for modifying the wastewater
monitoring program is $1,500 per year. This administrative penalty and
ongoing cost are not expected to have a material effect on the
consolidated results of operations, financial position, or cash flows of
the company.
Communities for a Better Environment (CBE) sent a Clean Air Act Notice
of Intent to Sue letter dated April 6, 1998, to the company. CBE claims
that the company's Sacramento facility has used certain solvents
allegedly in violation of emission limitations set by the District's
Rules and has not complied with certain record-keeping requirements.
These are the same issues that were raised in the District's Notices of
Violation referred to above, which were
-24-
<PAGE> 25
settled with the District in October 1997. CBE contends, however, that
the settlement with the District did not resolve the alleged violation
arising from the use of certain solvents on the grounds that the
District's method of settling the issue is not federally approved. The
company disputes the alleged violation and denies liability. Although
the company cannot predict the result of any CBE proceeding that may be
filed at this early stage, the ultimate disposition is not expected to
have a material effect on the consolidated results of operations,
financial position, or cash flows of the company.
The company has also been named as a potentially responsible party in a
number of proceedings brought under the Comprehensive Environmental
Response, Compensation and Liability Act, commonly known as Superfund.
Although the impact of these proceedings cannot be predicted at this
time due to the large number of other potentially responsible parties
and the speculative nature of clean-up cost estimates, the ultimate
disposition is not expected to have a material effect on the
consolidated results of operations, financial position, or cash flows of
the company.
ITEM 5. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements which are based
on management's current views and assumptions regarding future events
and financial performance. These statements are qualified by reference
to the section "Cautionary Statement on Forward-Looking Statements" in
Item 1 of the registrant's Annual Report on Form 10-K for the fiscal
year ended August 3, 1997. See Item 1 for a description of important
factors that could impact the company's strategic growth plan goals and
cause actual results to differ materially from those expressed or
implied in the forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
--------
No.
---
4 There is no instrument with respect to long-term debt of the
company that involves indebtedness or securities authorized
thereunder exceeding 10 percent of the total assets of the company
and its subsidiaries on a consolidated basis. The company agrees to
file a copy of any instrument or agreement defining the rights of
holders of long-term debt of the company upon request of the
Securities and Exchange Commission.
27 Financial Data Schedule.
-25-
<PAGE> 26
b. Reports on Form 8-K
-------------------
A Form 8-K reporting the March 30, 1998, spin-off of the company's
Specialty Foods segment to its shareowners as an independent company,
Vlasic Foods International Inc., together with the company's Pro Forma
Consolidated Financial Information was filed with the SEC on April 14,
1998.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMPBELL SOUP COMPANY
Date: June 16, 1998 By:/s/ Basil Anderson
--------------------
Basil Anderson
Executive Vice President and
Chief Financial Officer
By:/s/ Ellen O. Kaden
--------------------
Ellen O. Kaden
Senior Vice President
Law and Government Affairs
-26-
<PAGE> 27
INDEX TO EXHIBITS
Exhibit Number
- - --------------
27 Financial Data Schedule.
-27-
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<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-02-1998
<PERIOD-START> AUG-04-1997
<PERIOD-END> MAY-03-1998
<CASH> 46
<SECURITIES> 0
<RECEIVABLES> 794
<ALLOWANCES> 35
<INVENTORY> 542
<CURRENT-ASSETS> 1,581
<PP&E> 3,537
<DEPRECIATION> 1,593
<TOTAL-ASSETS> 6,051
<CURRENT-LIABILITIES> 3,127
<BONDS> 1,191
0
0
<COMMON> 20
<OTHER-SE> 916
<TOTAL-LIABILITY-AND-EQUITY> 6,051
<SALES> 5,397
<TOTAL-REVENUES> 5,397
<CGS> 2,623
<TOTAL-COSTS> 2,623
<OTHER-EXPENSES> 1,845
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131
<INCOME-PRETAX> 798
<INCOME-TAX> 291
<INCOME-CONTINUING> 507
<DISCONTINUED> (18)
<EXTRAORDINARY> 0
<CHANGES> (11)
<NET-INCOME> 478
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.04
</TABLE>
